A reader thinks he found a loophole: Ask a relative with terminal cancer to co-sign his loan.
Question: I’m going for a master’s degree, but I’ve maxed out all my public student loans, got all the scholarships I’m gonna get. I already work two part-time jobs. So I need a private student loan. But it’s the same old Catch 22: I don’t have enough money to get a bank to give me money.
My aunt was just diagnosed with cancer, and it’s bad. She’s got maybe a year. She jokingly said she’d co-sign a loan for me, and good luck collecting from her if I can’t pay it back. (Which I probably can’t.)
This sounds like a great loophole. What do you think, Howard?
— Paul in Oklahoma
Howard Dvorkin CPA answers…
What do I think? First, I extend my sympathy to your aunt. Second, you said your aunt was joking. I tend to agree that it’s a better laugh than a plan.
Here’s the problem: When your aunt dies, the loan doesn’t.
You seem to be aware that you’ll be responsible for the payments, Paul. What you may not know is this, according to student loan expert Heather Jarvis…
The death of the borrower or the cosigner can trigger default. That means the entire balance becomes due immediately, even if the surviving signer has always made payments on time.
In addition, the holder of the loan can go after your aunt’s estate, which means if she planned to leave money for you or her other relatives, there may be little or nothing left for them.
In the short term, your aunt’s joke is a good way to get a loan you wouldn’t otherwise qualify for. But in the long run, it may not be worth it. So what else can you do?
I’ve counseled people in your position before: Consider delaying your education. You already have a bachelor’s degree, so find a full-time job and save money before returning to graduate school. Many educational as well as financial experts believe this not only helps you save money, it helps you mature.
Of course, once you start working, you’ll soon start getting billed for your federal student loans. That’s where Debt.com can help you reduce your monthly payments through government-approved programs. We can help you find the right one for you. Call one our experts at 1-800-810-0989 for a free consultation.
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Email your question to email@example.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.
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Article last modified on January 23, 2019 Published by Debt.com, LLC . Mobile users may also access the AMP Version: Ask The Expert: Can A Dying Person Co-Sign My Student Loan? - AMP.